Contract Closeout

The first Closing process is contract closeout. Contract closeout is a process that consists of the following activities:

  • Product verification

  • Administrative closeout

  • A procurement audit

  • Formal acceptance

It is helpful to have a solid understanding of these four items; however, at a minimum, make certain for the exam that you know they are a part of contract closeout, which is a step in the Project Closing process.

Product verification must be completed to ensure that all work was done according to the specifications in the contract.

Administrative closeout includes the updating and finalization of records. For exam purposes, it is also important to remember that contract payment and lessons learned are a part of administrative closure.

A procurement audit is a review of all steps in the procurement process to determine its successes and failures.


The objective of a procurement audit is to gain insight into procurements and to transfer this knowledge to other procurements on the same project or other projects.

Formal acceptance should be provided to the seller, in writing, by the person responsible for contract administration.


The requirements for formal contract closeout are defined in the contract terms and conditions.

Similarities Between Contract Closeout and Administrative Closure

It's important to remember that contract closeout and administrative closure are two separate process steps in the Project Closing process. This can be confusing, because as was described in the previous section, the activity of administrative closeout is part of contract closeout. However, the process of administrative closure involves the entire project, not just the contract. Plus, it should be executed at the end of each project phase.


Contract closeout and administrative closure both involve verification of results and the updating and archiving of relevant documents.

Contract Documentation That Should be Reviewed During Contract Closeout

Contract documentation is listed in the PMBOK in Section, and it should be reviewed during contract closeout. It is important that you review the items on this list; the exam may try to trick you with a document that sounds similar to these but is not truly considered a part of contract documentation. Items deemed to be contract documentation by PMI include the following:

  • The contract

  • Supporting schedules

  • Requested and approved contract changes

  • Seller-developed technical documentation

  • Seller performance records

  • Financial documents such as invoices and payment records

  • Contract-related inspection results


Remember that the procurement audit is a key tool in the contract closeout process and is not contract documentation.

PMP Exam Cram 2. Project Management Professional
PMP Exam Cram 2. Project Management Professional
Year: 2003
Pages: 169 © 2008-2017.
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